2018 was a difficult year for banks - their reputations suffered massively after it came to light that most of them had large NPAs, sins they committed knowingly. One year prior, in 2017-18, the gross NPA ratio of all scheduled commercial banks reached 11.2 percent of the gross advances, up from 9.3 percent a year before. Public sector banks, which account for nearly 70 percent of the advances, saw gross NPA ratios rise to 14.6 percent due to, and I quote the RBI here, “restructured advances slipping into NPAs and better NPA recognition.” Better NPA recognition is, of course a fancy way of saying that banks got caught for the bad loans they gave out.

After the government and the RBI cracked the whip last year, most, if not all, banks were forced to clean up their balance sheets. 2019 may turn out to be a better year for these banks, albeit under a fair amount of duress. This is what we will dig deep into on this edition of Digging Deeper with Moneycontrol.